The ’India Story’ Is a Fantasy Written in New Jersey

By Pankaj Mishra -
Jul 22, 2013

U.S. Vice President Joe Biden is
visiting India this week to, among other things, drum up fresh
business for American companies. The magnitude of his task can
be judged by the fact that a few days before his arrival,
steelmakers Posco and ArcelorMittal (MT) SA canceled huge projects in
India because of land disputes. Wal-Mart Stores Inc. (WMT) has shown
signs of pulling out as well, despite new laws supposedly
allowing foreign ownership in the retail sector. The Indian
government’s latest desperate attempt to reverse the flight of
foreign investment and the fall of the rupee -- by opening up
telecommunications to 100 percent foreign ownership -- doesn’t
look any more likely to change minds.

Is the “India Story” over, as many commentators have
begun to observe? Actually, the more relevant question today is:
How did it grow and circulate as widely and rapidly as it did?
Unlike China, with which it was routinely and inaptly compared,
India never undertook extensive land reforms, nor did it
adequately train its workforce or set up large-scale labor-intensive manufacturing -- three crucial enablers in the rise of
almost all East Asian economies.

The country has a youthful population. But long and deep
investments in education and public health, not to mention
vastly improved physical infrastructure, would have been needed
to realize the country’s demographic dividend. Could the
information-technology sector alone help a country lift its 1.2
billion people out of poverty and flatten the world? Thomas Friedman certainly thought so, hailing Bangalore’s “Zippies”
as the winners of globalization, certain to put their American
counterparts out of work.

Strategic Partner

Even Americans much less prone to oracular pronouncements
succumbed to what seemed, in Fareed Zakaria’s phrase, a
“powerful package”: India, the world’s largest democracy, a
potential strategic partner and a rising economy to boot.
(Interestingly, Chinese investors and commentators assessed
India’s progress much more cautiously.) The widespread
impression of an irresistibly rising Asian power prompted Biden
himself, then a senator, to push for lifting sanctions imposed
by President Bill Clinton on India in 1998 and to support
President George W. Bush’s 2005 deal for civil nuclear
cooperation between the U.S. and India.

India’s upper caste, endowed with a fluency in English and
a confidence distinctly lacking in its Korean or Japanese
counterparts, went out of its way to reciprocate American
attention. A U.S. diplomat in Delhi was proudly shown two chests
containing $25 million in cash -- money to bribe members of the
Indian Parliament into voting for the nuclear deal. Visiting the
White House in 2008, Prime Minister Manmohan Singh told a
startled-looking Bush that “the people of India deeply love
you.”

In a conversation disclosed by Wikileaks, Arun Jaitley, a
senior leader of the opposition Bharatiya Janata Party, urged
American diplomats in Delhi to see his party’s anti-Muslim
rhetoric as “opportunistic,” a mere “talking point.” As
Jaitley saw it, the great promise of friendship with the U.S.
easily transcended the State Department’s visa ban on Gujarat
Chief Minister Narendra Modi, the hardline Hindu nationalist
expected (largely by India’s corporate-owned media) to be
India’s next prime minister.

Jaitley himself had multiple “personal and commercial
connections to the U.S. (several U.S. corporates are legal
clients).” He enjoyed the “typical” good standing of the
Indian middle classes in the U.S.: Several of his nieces and
sisters lived there, and he had “five homes to visit between
D.C. and New York.”

American Aspirations

Jaitley exemplifies the New Jerseyfication of Indian
political and economic discourse in recent years -- something
largely attributable to an Indian elite with existing, or
aspirations to, strong American connections. India’s foreign
policy, for instance, has come to be premised on the continued
willingness of the U.S. to play global policeman (needless to
add, that stance has left India in the lurch in Afghanistan and
facing a suspicious China on its eastern border). Even debates
about the direction of the Indian economy have borrowed their
terms from the East Coast, as expressed presently by the staged
standoff in the Indian media between Jagdish Bhagwati and
Amartya Sen, two luminaries at Columbia University and Harvard
University, respectively.

The sociological -- and psychological -- factors behind the
swift Americanization of India’s elite, and the related making
of the “India Story,” are not so hard to figure out. Stumbling
out of an absurdly protectionist and uncreative economic regime,
which forced many of their relatives to immigrate to the U.S.,
Indian politicians, businessmen and opinion makers were eager
for a new redemptive vision in the late 1980s and 1990s.

As it turned out, this quest was too easily fulfilled by
the post-Cold War ideology of free markets -- a dominant
orthodoxy that, even as it faced an early Waterloo in Russia in
the early 1990s, made even East Asian economies appear a
successful example of minimal governments.

Having abandoned the delusions of a regulated economy,
India embraced the fantasies of an unregulated one. All
governments needed to do, we were repeatedly told, was get out
of the way of buoyant and autonomous entrepreneurs, and stop
subsidizing the poor and the lazy. Never mind that, as recent
crony scandals reveal, successive Indian governments were firmly
pro-big-business -- as opposed to pro-market. Gurcharan Das,
author of “India Unbound,” was among many claiming to see an
Indian revolution brought about by self-motivated individuals:
“India’s real success,” he claimed, “lies with its self-reliant and resilient people.” He added, “in India society has
triumphed over the state.”

Furthermore, India’s success seemed to be virtually
guaranteed by the success of Indian-Americans -- Vikram Pandit,
Anshu Jain and Vinod Khosla, among others -- who had come of age
during Ronald Reagan’s adventures in supply-side economics and
gone on to share the prosperity of Bill Clinton’s deregulated
America. Indeed, the Indian-American elite was given the
resonant voice of mediators and arbiters in the posh echo
chambers of Delhi and Mumbai.

Close Ties

A new book by Anita Raghavan, “The Billionaire’s
Apprentice: The Rise of the Indian-American Elite and the Fall
of the Galleon Hedge Fund,” reveals how well-placed men like
Rajat Gupta, the investment banker recently convicted for
insider trading, expedited close links between American and
Indian political and business leaders.

Indian academics perched on well-endowed chairs and
journalists hired by the American Enterprise and Cato institutes
could be trusted to recite the mantra of privatization and
deregulation in tune. Right-wing bloggers and tweeters
perennially lurking in a shadow intellectual economy helped
entrench Ayn Randian pieties, increasingly discarded or
challenged in the U.S. and Europe, in India’s influential
English-language press.

Very quickly, the notion that India was, as Foreign Affairs
proclaimed on its cover, a “roaring capitalist success story”
assumed an extraordinary persuasive power for Indians and
Americans alike.

Those of us who pointed to the very obvious frailty and
unevenness of India’s economic growth were denounced, most
passionately by long-distance Indian nationalists in New Jersey,
as sour party-poopers, if not dementedly “anti-Indian.” Some
of this may have been due to what V.S. Naipaul, visiting India
for the first time, described as an upper-caste “defect of
vision,” before the overwhelming fact of mass wretchedness -- a
blindness marked by “smugness” and “the refusal to see.”

But the viciousness of these attacks on a tiny minority of
dissenters also suggested that the self-image of many well-off
and rising Indians had become hopelessly entangled with the
conviction that India, once a shamefully poor country, was now
an emerging economic powerhouse. The myth of a rising India had
to be zealously protected in order to maintain one’s self-esteem
at an artificial high.

Weaker Partner

These Indian illusions about the self and the motherland
now seem to be the most enduring outcome of close India-U.S.
collaboration, which has yielded little of the political and
commercial bonanza hoped for by leaders like Biden. The U.S.,
ever innovative and resourceful, can of course afford to look
elsewhere for investments and alliances. It is its weaker
partner that must now undergo a radical self-reckoning.

There are some signs that this is indeed happening. Even
such once-fervent cheerleaders as Gurcharan Das now admit that a
strong, efficient state capable of building physical and social
infrastructure is essential to India’s growth. “An Uncertain
Glory: India and its Contradictions,” the new book by Jean Dreze and Amartya Sen, spells out the importance of a vigorous -
- and participatory -- democracy to this process. This narrative
with its conspicuous lack of Zippies doesn’t seem particularly
thrilling. But its sober realism may accord better with foreign
expectations and India’s own needs than does the exuberant
surrealism of the “India Story.”

(Pankaj Mishra is the author of “From the Ruins of Empire:
The Revolt Against the West and the Remaking of Asia” and a
Bloomberg View columnist, based in London and Mashobra, India.)

To contact the writer of this article:
Pankaj Mishra at pmashobra@gmail.com.